Money for Nothing
IF there is one government document Malaysians look forward to each year, it’s the Auditor-General’s Report. Once released, we go crazy picking it apart and selecting our favourite delectable pieces to rave about to friends.
It was no different this year with the 2012 report. This time, we even managed to make it to the Wall Street Journal that reported on the wasteful spending and mismanagement.
For instance, we read about the Education Ministry wasting RM2 billion on poor school security systems with unsatisfactory results, 20 branded wall clocks bought by the Broadcasting Department for RM3,810 each, more than 38 times the estimated price of RM100, and a RM400,000 claim difference for Health Ministry uniforms, among many other ridiculously shameful examples (never mind the 44 missing loaded firearms that the police said could have fallen into the sea from boats).
A total estimate of wastage caused by such gross inefficiency was not given, mainly because this was merely a partial audit of the federal government bureaucracy. The report only covered observations from the audit of 45 programmes/activities/projects of the federal ministries/departments and management of six government companies, so imagine the results if this sampling was widened to include the hundreds of programmes run by the total number of 24 ministries over the full year.
Even so, the total sum of wastage based on select cases quoted by mainstream media came up to RM3.5 billion, which, by the way, is RM200 million more than what the Finance Ministry has told us the government would save by increasing oil prices in its recent subsidy rationalisation move.
Although government does eventually need to phase out subsidy dependency, what infuriates people most is that such efforts are not perceived to be matched in commensurate measure by attempts to reduce unnecessary government spending.
It was timely that an IDEAS policy paper (the Institute for Democracy and Economic Affairs for which I work) by author Professor David Jones from the University of Brunei Darussalam, gave specific proposals on how transparency could help existing failings in the public procurement system.
He states that Malaysia spends more than RM150 billion each year on procurement, almost one fourth of our nominal GDP. This is higher than what most OECD countries spend, about 12% of their GDP annually.
The various acts, treasury instructions and circulars that form the basis of government procurement are clear, for example in stipulating that open tenders are required for works, goods and services procured worth more than RM200,000 a year.
However, direct purchases and quotation/ closed tenders are still allowed for procured works, goods and services of value below RM200,000, which opens up a lot of room for potential bribery and corrupt practices – and this is the heart of the matter.
The three most worrying concerns that this annual debacle raises are first, that the report released year after year does little to change administrative practices but raise public ire.
Although a committee will be set up to scrutinise the report and take “stern action” against anyone involved in misappropriation, it remains to be seen if the real culprits will be brought to shame.
Second is the culture that is ingrained into many public servants that government money is abundant and ever-flowing. During my first few months of working at the newly-elected Selangor government, the staff in charge of catering food for meetings would consistently increase the number of people being ordered for.
As I understand it, this was common practice: order for more, so that the remaining food could be packed by civil servants who would mysteriously flock in from other parts of the building. Although this has since changed, one wonders if this applies in larger scale in say, ministry offices.
Among the recommendations of the IDEAS policy paper to improve the procurement system are to publicise the laws, regulations and instructions governing procurement, widely advertise tenders and quotations, disclose the budget ceiling for each tender, disclose the company awarded the tender, the reasons for this, better procurement planning processes, and also include a representative from a watchdog organisation to sit in procurement board meetings.
The auditor-general has made 796 different recommendations to the federal government in his 2010, 2011 and 2012 reports. This year, he specifically cited improper payment and weakness in management of products and assets as among the weaknesses observed.
Of course, what is not mentioned is the inability of civil servants to themselves act even if they wanted to because ultimately, evaluation and contract awards are influenced by politicians’ lobbying, and “recommendation letters” that reflect vested interests that they are connected to.
Third, this raises further questions as to the areas of government spending that the AG’s office does not investigate, for instance public-private partnerships (PPP) and private-finance initiatives (PFI) projects that may not necessarily fall under the government procurement regulation requirements.
Although tenders are encouraged under PPP, the decision is ultimately made by the cabinet. (The cabinet is the final decision-maker for all procured jobs across the board worth more than RM100 million.)
More importantly, government spending during a pre-election period – was the RM2.2 billion payout for present and retired civil servants Prime Minister Datuk Seri Najib Razak announced just weeks before the May 5 election part of planned expenditure, for example?
Unless recommendations from the report and independent parties are seriously taken up, without political interference (which we all know is the biggest roadblock on the path to better governance), the AG’s report will continue to be fodder for criticism.
What should be of even more grave concern to all Malaysians is the great unknown – just how much more wastage and inefficiencies are there, which are not being investigated?